Will a Biden Presidency Be What Bullish Oil Traders Need?

Bullish oil traders are looking for any wind in their sails that can get oil prices moving in the right direction and they just might get it with the forthcoming U.S. presidential election. With Democratic hopeful Joe Biden vying to become the leader of the free world, it could give oil prices a boost, according to global investment firm Goldman Sachs.

A CNBC article noted that in spite of “a grim demand outlook for energy as the coronavirus pandemic continues to weigh down the global economy, Goldman Sachs remains bullish on both oil and gas prices — regardless of the U.S. presidential election outcome in November.”

“We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst,” the bank’s commodities team wrote in a research note.

“Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone,” the note said.

Oil Exposure Via ETFs

Traders who feel ready to pounce can use funds like the United States Oil Fund, LP (USO). Additionally, those looking to lever up their trades can use the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (NYSEArca: GUSH).

USO seeks the daily changes in percentage terms of its shares’ per share NAV to reflect the daily changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the daily changes in the price of a specified short-term futures contract on light, sweet crude oil called the Benchmark Oil Futures Contract, plus interest earned on USO’s collateral holdings, less USO’s expenses. USO invests primarily in futures contracts for light, sweet crude oil, other types of crude oil, diesel-heating oil, gasoline, natural gas, and other petroleum-based fuels.

GUSH seeks daily investment results, of 200% of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments and securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index. The index is designed to measure the performance of a sub-industry or group of sub-industries determined based on the Global Industry Classification Standards.

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